EUR/GBP is currently testing the falling trend line on the 4-hour time frame, suggesting that another sharp drop might take place sooner or later. In terms of economic data, the euro zone is definitely doing worse than the U.K. so it’s reasonable to take a bearish fundamental bias on this pair.

Stochastic is also heading lower, indicating that selling pressure is still strong. Further declines for the pair could push it down to the previous lows near .8075 or lower to .8000.

Shorting at market with a tight stop above the trend line and a target of .8000 could yield a decent return on risk.

By Kate Curtis from Trader’s Way